India is facing a severe fertiliser shortage despite good monsoons. Imports from China have dropped significantly, while domestic policies and poor planning threaten farm yields and food security.

• In 2024–25, China sharply reduced its exports of urea and diammonium phosphate (DAP), critical to India’s supply. The global fertiliser market, influenced by geopolitical tensions, disrupted India’s fertiliser availability despite good monsoon rains.

Current Fertiliser Shortage – Causes and Farmer Impact

• Supply Shock: China, India’s largest fertiliser supplier in 2023–24 (21.5 lakh tonnes of urea and 22.9 lakh tonnes of DAP), has sharply reduced exports in 2024–25 to just over 1 lakh tonnes of urea and 8.4 lakh tonnes of DAP.
  • Global supply chains have been disrupted by geopolitical tensions and export restrictions.
• Domestic Policy Constraints: The maximum retail price of urea has been fixed at ₹266.5 per bag since November 2012, with imports canalised only through state trading enterprises, discouraging private competition.
  • Inadequate diversification of sourcing beyond China, West Asia, Russia, and Morocco.
  • Poor demand forecasting despite higher acreage of nitrogen-intensive crops.
• Farmer Impact: Farmers have been queuing for hours, facing black marketing, and often unable to procure their minimum fertiliser requirement.
  • Likely reduction in grain yields despite adequate rainfall.

Why Planning Failed Despite Monsoon Forecasts?

• Over-reliance on historical trends: Fertiliser allocation based on past consumption patterns instead of real-time acreage data of nitrogen-intensive crops such as paddy and sugarcane.
• Delayed procurement decisions: Imports not secured in advance despite early warnings of Chinese export restrictions.
• Centralised distribution rigidity: Canalisation through state trading enterprises limited private participation and flexibility in sourcing.
• Poor inter-ministerial coordination: India Meteorological Department’s (IMD) monsoon forecast, Agriculture Ministry’s sowing estimates, and Department of Fertilisers’ demand projections were not aligned.

About Fertilisers

• Fertilisers are chemical or natural substances added to soil to supply essential nutrients for crop growth. They supplement soil fertility and enhance agricultural productivity.
• Types of Fertilisers:
  • Based on Origin:
    • Chemical/Inorganic Fertilisers: Urea, DAP (Diammonium Phosphate), MOP (Muriate of Potash).
    • Organic Fertilisers: Farmyard manure (FYM), compost, vermicompost, green manure.
    • Bio-fertilisers: Microorganisms that fix nitrogen or solubilise nutrients (e.g., Rhizobium, Azotobacter, Mycorrhiza).
  • Based on Nutrient Content:
    • Primary Nutrients (NPK):
      • Nitrogenous: Urea, Ammonium Sulphate.
      • Phosphatic: DAP, SSP (Single Super Phosphate).
      • Potassic: MOP (Potassium Chloride).
    • Secondary Nutrients: Calcium (Ca), Magnesium (Mg), Sulphur (S).
    • Micronutrients: Zinc (Zn), Boron (B), Copper (Cu), Manganese (Mn), Iron (Fe), Molybdenum (Mo).

About the Fertiliser Sector and Related Important Data

• Key Fertilisers Used in India and Globally: Urea, diammonium phosphate (DAP), and muriate of potash (MOP) are the most commonly used fertilisers in India. Globally, urea remains the most produced fertiliser, with India being one of the largest consumers.
• High Import Dependence on Fertilisers: India imports about 25–30% of its urea and 90% of phosphatic fertilisers, highlighting the sector’s dependence on global supply chains.

• Rising Fiscal Burden of Fertiliser Subsidy: Fertiliser Subsidy for 2024–25 is projected at ₹1.63 lakh crore, straining government finances.
  • The actual subsidy disbursed up to July 21, 2025 stands at ₹49,329.88 crore, broken down as:
    • ₹30,940.82 crore for domestic urea
    • ₹4,006.70 crore for imported urea
  • The Parliamentary Standing Committee had initially projected a higher outlay of ₹1,84,704.63 crore for the Department of Fertilizers in FY 2025–26. This was subsequently reduced by 7.38% by the Ministry of Finance to ₹1,71,082.44 crore, affecting both urea and NBS allocations.

Structural Issues in India’s Fertiliser Sector

• High Import Dependence: India imports nearly 25 to 30 percent of urea and about 90 percent of phosphatic fertilisers.
• Subsidy Burden: Fertiliser subsidies projected at ₹1.63 lakh crore for 2024–25, creating fiscal stress.
• Regulatory Controls: Price caps, profit ceilings, and retrospective monitoring reduce industry incentives.
  • Slow registration: Average 804 days for new fertilisers in India versus 30 days in the European Union.
• Soil-Fertiliser Mismatch: Current NPKS (nitrogen–phosphorus–potassium–sulphur) grades do not suit regional soil requirements, forcing farmers to pay extra for customised blends.

How Subsidy Structure Disincentivises Balanced Fertiliser Use?

• Frozen urea price since 2012: Urea remains artificially cheap compared to DAP and MOP, driving overuse of nitrogen.
• Skewed NPK Ratio: Recommended ratio 4:2:1, but actual use in many states is closer to 8:3:1.
• Rigid Nutrient-Based Subsidy (NBS): Subsidy rates for phosphorus and potassium not revised regularly, discouraging private imports.
• Exclusion of micronutrients: Lack of subsidy support raises costs of zinc, boron, and others, worsening soil health imbalance.

About Non-Subsidised Fertilisers and Deregulation

• Background: India’s fertiliser sector operates under dual regulation:
  • Subsidised fertilisers (Urea, DAP, MOP, some NPK): price-controlled under the Urea Subsidy Scheme or Nutrient-Based Subsidy (NBS) Scheme.
  • Non-subsidised fertilisers: outside subsidy framework, sold at market-determined prices.
• Examples of Non-Subsidised Fertilisers: 
  • Complex fertilisers not covered under NBS (customised NPK blends).
  • Secondary and Micronutrients: Zinc Sulphate, Boron, Gypsum, Sulphur, etc.
  • Specialty Fertilisers: Water-Soluble Fertilisers (WSF), Nano-fertilisers.
  • Organic and Bio-fertilisers: City compost, microbial inoculants, bio-stimulants.
• Deregulation in India: 
  • Policy Shift (1992 onwards): Phosphatic and Potassic (P&K) fertilisers decontrolled; only Urea remains under statutory price control.
  • Under NBS (2010): Government fixed a per kg subsidy for nutrients (N, P, K, S) while letting manufacturers decide MRPs.
  • Non-subsidised fertilisers are fully deregulated — no subsidy, no price control.
• Why Deregulate?
  • Reduce Subsidy Burden: Frees fiscal space for rural infrastructure, irrigation, and agricultural development.
  • Encourage Competition: Promotes market-driven pricing, private investment, and technological innovation.
  • Faster Access: Facilitates quicker entry of water-soluble fertilisers (WSF), nano-fertilisers, and speciality products.
  • Efficiency: Aligns fertiliser use with market signals, potentially reducing misuse of heavily subsidised urea.
• Risks of Deregulation: 
  • Affordability Issues: High costs may hurt small and marginal farmers.
  • Unequal Benefits: High-value crops (fruits, vegetables, floriculture) benefit more, while staple crops (wheat, rice) remain less profitable.
  • Information Asymmetry: Without guidance, farmers may misuse or overuse inputs, worsening soil health.
  • Price Volatility: Exposes farmers to global raw material price shocks.
• Actions that can be taken:
  • Promote balanced fertiliser use via Soil Health Cards and farmer awareness.
  • Provide targeted subsidies for micronutrients in deficiency-prone areas.
  • Boost domestic production of speciality and bio-fertilisers.
  • Encourage organic and bio-fertilisers under sustainable farming policies.
  • Strengthen extension services to reduce information gaps.
  • Innovative Models:
    • Water-Soluble Fertiliser Model (2015 Guidelines): WSFs must be 100% water-soluble and can be applied through drip irrigation or spraying.
    • Specifications for WSFs:
      • Minimum 30% total nutrient content (25% primary nutrients NPK).
      • Balance of secondary (Sulphur, calcium, magnesium) and micro-nutrients (zinc, boron, manganese, iron, copper, molybdenum).
      • Maximum limits for contaminants (lead, cadmium, arsenic, total chloride, and sodium).
      • Companies can market WSFs meeting these standards after notifying authorities 30 days in advance.
    • Nano Fertilisers: Nano urea and nano DAP have improved yields such as peas (14.8 percent), sugarcane (4 percent).
      • Require large-scale field trials and farmer awareness campaigns.

Key Schemes and Policies for Fertilisers in India

• Nutrient-Based Subsidy (NBS) Scheme (2010): Provides subsidy per kilogram of nitrogen, phosphorus, potassium, and sulphur to encourage balanced fertiliser use in the 4:2:1 ratio.
• Neem-Coated Urea (2015): Made mandatory for 100% production; reduces diversion, enhances nutrient efficiency, and supports environmental sustainability.
• Soil Health Card Scheme (2015): Provides farmers with customised fertiliser recommendations every two years, promoting efficient and balanced nutrient management.
• Direct Benefit Transfer (DBT) in Fertilisers (2016): Subsidy released to companies only after actual sale to farmers through Point-of-Sale (PoS) machines at fertiliser retailers.
• Nano Urea (2021 – IFFCO): World’s first liquid nano-fertiliser commercially launched; improves nutrient efficiency, reduces import dependence, and lowers subsidy burden.
• PM-PRANAM Scheme (2023): Incentivises states for reducing fertiliser consumption and promoting alternative, sustainable fertilisers like organic and bio-fertilisers.
• New Guidelines on Non-Urea Fertilisers (2023, retrospective): 
  • Profit Caps: 8 percent (importers), 10 percent (manufacturers), 12 percent (integrated firms).
  • Excess profits refunded to the Department of Fertilisers.

Global Initiatives & Actions

• International Partnerships: Countries like Russia, Morocco, and Jordan are major sources of phosphatic fertilisers. Partnerships with these nations can help reduce import dependency.
• Sustainable Practices: Countries like the European Union focus on bio-fertiliser and nano-fertilisers to reduce reliance on traditional chemical fertilisers, promoting environmentally friendly practices.

Wider Implications of the Fertiliser Crisis

• Food inflation: Lower yields of rice, wheat, and pulses push food prices up, increasing PDS subsidy burden.
• Farmer Protests and Rural Discontent: Queues, black marketing, and unmet demand aggravate agrarian distress and political unrest.
• Decline in Rural Incomes: Reduced yields and higher black-market prices cut farmer margins.
• Threat to Food Security: Despite good monsoons, inadequate fertiliser availability risks shortfalls in NFSA buffer stocks.
• Strategic Vulnerability: Dependence on a few supplier countries exposes India to geopolitical shocks, undermining Atmanirbhar Bharat.
• Governance and Sustainability Concerns:
  • Equity: Ensuring affordable access for small and marginal farmers.
  • Transparency: Tackling black marketing and subsidy diversion.
  • Sustainability: Curbing overuse of nitrogen fertilisers to protect soil and water.
  • Self-Reliance (Atmanirbhar Bharat): Strengthening domestic production to reduce dependence on imports.

Way Forward

• Short-Term Measures:
  • Diversify Import Sources: Reduce vulnerability to China and Morocco by securing supplies from multiple countries and exploring bilateral agreements.
  • Strengthen DBT Monitoring: Use Aadhaar-linked sales, real-time tracking, and geotagging of warehouses to curb diversion and black marketing.
  • Efficient Logistics: Prioritise rail movement and streamline last-mile delivery to avoid peak-season shortages.
• Medium-Term Measures:
  • Revive Domestic Fertiliser Plants: Fast-track urea and DAP plant modernisation and enhance public–private partnerships in production.
  • Rationalise Subsidy Structure: Shift from product-based subsidies to a nutrient-based subsidy (NBS) system that encourages balanced fertiliser use.
  • Promote Nano and Bio-Fertilisers: Scale up research, farmer training, and subsidies for eco-friendly alternatives.
• Long-Term Measures:
  • Soil Health-Centric Agriculture: Institutionalise Soil Health Cards, precision farming, and customised nutrient recommendations.
  • Sustainability and Climate Resilience: Integrate organic manures, crop diversification, and natural farming practices into agricultural policies.
  • Reduce Import Dependence: Build strategic reserves of fertilisers and raw materials while promoting domestic R&D and indigenised production.

Conclusion

The fertiliser shortage highlights the paradox of Indian agriculture as good monsoons coinciding with poor fertiliser management. Ensuring food security and farmer welfare requires better demand forecasting, supply diversification, and policy reforms. A mix of domestic capacity building, innovative alternatives, and rationalised subsidies can make India’s farm sector more resilient and sustainable.

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